To reclaim its position as a world leader, the United States must "do what we're known for," such as innovation, creativity and "making things," the president said during a visit to Forsyth Technical Community College in Winston-Salem, N.C.
He called the recession this generation's "Sputnik moment," referring to the Soviet Union's launching of an unmanned space module before the United States.
"If this is truly going to be our Sputnik moment, the United States has to have (as great a) commitment to innovation since President Kennedy committed to go to the moon."
He said he wanted goods bought around the world to be stamped with three words: "Made in America."
He said he would be meeting with his economic team and others to develop policies and recommendations on the U.S. economy.
Broadly, Obama said, "It's a vision that will keep our economy strong, competitive and growing in the 21st century."
Global competition will be more fierce and winning countries will have the most educated workers, the most serious commitment to research and development and the best access to quality infrastructure, Obama said.
"The most important contest we face is not between Democrats and Republicans but between America and our economic competitors around the world," Obama said.
He told his audience that the United States fell from first to ninth place on proportion of students holding college degrees. Concerning students with a high school education, he said, America ranked 18th of 24 nations.
He said he was committed to keeping investments in education, innovation and infrastructure, even though "we face a very difficult situation."
"Now that the threat of a depression has passed and a recovery is beginning to take hold, reducing the deficit has to be a priority," Obama said. "We won't be able to compete with countries like China as long as we keep borrowing from countries like China."
But he will "argue and insist" that investments that will have the biggest impact on the U.S. economy not be cut, Obama said.
"The idea of cutting the deficit by cutting investments," Obama said, "Is like reducing the weight of an overloaded aircraft by removing the engine -- it's not a good idea."
Obama said "there should not be any inherent ideological differences" to making the economy more competitive globally.
"If wiling to put aside short term politics ... then we should be able to get our act together here," Obama said. "Because we are all Americans and we are all in this race together."